Saturday, May 26, 2012

Mapping the Landscape of Underwater Mortgages

Think the United States is turning the corner on the housing crisis? This negative equity map from Zillow might change your mind. Just plug in a zip code to see the percentage of homeowners underwater on their mortgage in that area. In my old Civic Park neighborhood — the 48504 zip code —it's 65 percent, placing it in the worst 5 percent nationwide.

18 comments:

Okay, this is gonna sound weird, but I expected the numbers to be much worse in parts of Flint, especially in the 48504. I mean you could make the argument that those houses have almost no value, even the fully occupied and well kept. Because who would buy them? Not trying to be an ass, just being realistic. It seems like the Flint "market" is really non-existent in many zips. It's impossible to place a real value on the homes, so how can you have a market?

Just to let you know, that when I plug in my current zip code of Flushing (city) it gives me the township information. I am very sure the city and the township have much different numbers but nothing I played with at the site would change it.

Being under water is a relative term, which is why there is such a great variation in the home prices vs. the percentage underwater in disparate zip codes. In older areas, the values may be less, but perhaps a greater percentage are paid off and have no mortgage. Under water means that the fair market value is less than the mortgage balance, since the equity is the fair market value minus the mortgage balance.

Even more insidious is the fact that much of most peoples' net worth is in their houses, and even if they are paid off, the value is less than it was a few years ago, hence people's net worth is also less. But paid off houses are not under water. But their value is insidiously driven down by the ones that are.

Even some Flint Expatriates with Painted Ladies in the Haight Ashbury District have seen their house values plummet the last few years, at least according to some checking on Zillow. So there's no escaping it, I guess.

Not sure if the overall boundaries of 48504 have changed, but that was my zip on Bassett Place near Civic Park School in the early seventies through 1986, and it still covers that area. And I noticed that some of the labeling on the map is a little odd. For example, it refers to areas as Flint Township that are actually in the City of Flint. But that may be because postal zips span both cities and townships in many instances. So that might explain the Flushing Township label for zips that include parts of the town of Flushing. Or it could just be a mistake.

And, yes, this map doesn't capture all the lost value around the country. If you bought a house in Civic Park, for example, in 1988 for $100 K and have paid it off, you're not underwater on your mortgage because you no longer have a mortgage. But you've lost a lot of value on your home because you'd have to sell it now for $20 K, if you're lucky.

Just realized those hypothetical numbers are really hypothetical. A more likely scenario would be that you bought a house in Civic Park in 1988 for $30K and it's now worth $5K, if you could find a buyer.

48532 came about about the same time as 48509, 48519, and 48529 in Burton. 48529 was previously 48507, and I believe the others resulted from two other Flint Zip Codes.

As far as I'm concerned, all of our woes were precipitated by an artificial run up of oil prices in 2008, hiding behind a dubious theory called "Peak Oil". It has since been shown that the Central and Western US has more acceessible oil than Saudi Arabia, and probably a lot more. There is still not enough will to fully develop these resources.

The run up in oil prices decimated the US Auto Industry, and banks and government refused to prop it up, which they had done previously, forcing GM and Chrysler into bankruptcy.

All of the other economic problems were precipitated by too easy access to loans immediately previous to the oil price run up, exacerbating the oil price economic problems, and causing the housing price collapse.

I know this is pointless and I'll be bombarded with Big Oil talking points but...

Why not simply invest the money it would take to trash the environment even more by squeezing out the last drops of oil out of the earth and spend it on alternative energy sources? We'll need them quite soon anyway, so why not start now? Besides, when you consider total cost (environmental damage, healthcare costs related to fossil fuels, etc., it will be cheaper.) We created the auto industry/oil industry with government incentives, why not use incentives to create a new industry we'll need quite soon and would be less expensive and better for the environment?

Again, I know this is pointless and I'll now be subjected to all the harebrained arguments promoted by the oil industry, an industry, by the way, praying for the end days of oil so it can really jack up the prices. Just wait.

The biggest reasons oil has not been replaced are that alternative energy sources don't work that well, and cause a whole bunch of NEW environmental and elemental supply and disposal problems. Consider the Cadmium in Nickel Cadmium rechargeable batteries, which were once the answer for eliminating batteries filling landfills. Huge environmental problem, and each new technology produces problems that are as bad or worse that the energy they were supposed to replace.

Electric cars have been around about as long as gasoline powered cars. I saw them at the IMA and the Sloan Museum. They just have never worked out well.

Just like public transportation never works well. Breakdowns, always running behind schedule, strikes, standing on an accelerating vehicle, muggers, pickpockets, panhandlers, murderers, rapists, and groping perverts are as old as public transportation.

Thanks for commenting. You might enjoy my book about Flint called "Teardown: Memoir of a Vanishing City," a Michigan Notable Book for 2014 and a finalist for the 33rd Annual Northern California Book Award for Creative NonFiction. Filmmaker Michael Moore described Teardown as "a brilliant chronicle of the Mad Maxization of a once-great American city." More information about Teardown is available at www.teardownbook.com.

"Teardown: Memoir of a Vanishing City" by Gordon Young

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Flint Expatriates

A blog for the long-lost residents of the Vehicle City by Gordon Young

"I grew up on the Eastside and recall the unexplained pride I felt when the 3:30 Buick factory whistle blew and the roughly dressed workers poured out of the General Motors labyrinth swinging their lunch pails. Some were headed for home and some for the corner bar, but all with the determined step of an army after a battle won. I somehow felt as if I were a part of this giant assembly line and the city it fed."